Fitch raises South Texas Electric to A

Fitch Ratings said it upgraded the rating on South Texas Electric Cooperative's implied senior secured obligations to A from A-.

The rating is on the implied senior secured obligations because none of South Texas Electric’s roughly $950 million of outstanding long-term debt is publically held.

The outlook was revised to stable from positive.

The senior secured obligations are secured by a first lien on substantially all of the cooperative's assets, including its eight member contracts.

Fitch said the upgrade reflects South Texas Electric’s trend of healthy financial performance despite considerable expansion in recent years and debt levels that are above average.

Debt service coverage (DSC) levels are robust and new financial policies are designed to keep DSC between 1.3 times and 1.5 times annually, the agency explained.

Equity has also reached South Texas Electric’s own target minimum equity of 20%, which is just below Fitch's category medians.

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